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Cooper Adams Newsletter Spring 2015

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*Calculation based on the Chancellors Autumn Statement on 03/12/2014

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Stamp Duty Land Tax rates

You have to pay Stamp Duty Land Tax (SDLT) if you buy a property in the UK over a certain price. This is charged on all purchases of houses, flats and other land and buildings.

Different rates apply in Scotland from 1 April 2015 when Land and Buildings Transaction Tax (LBTT) replaces SDLT.

The SDLT rate depends on:

  • the purchase price of the property
  • whether the property is residential

SDLT may also be due if you lease a property.

SDLT rates from 4 December 2014

SDLT is charged at different rates depending on the portion of the purchase price that falls into each rate band.

Before 4 December 2014, SDLT was charged as a single percentage of the property price.

Where contracts have been exchanged on or before 3 December 2014, and the transaction is completed on 4 December or later, you can choose whether you follow the new or the old rules.

Residential properties

Purchase price of property Rate of SDLT (percentage of the total purchase price)
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12%

Corporate bodies

SDLT is charged at 15% on residential dwellings costing more than £500,000 bought by bodies like:

  • companies
  • collective investment schemes

There are some exceptions. For example, you pay SDLT based on the new rates and bands where the property is used for:

  • a property rental business
  • a property development or resale trade
  • providing admission to visitors on a commercial basis

Residential leases

If your residential lease is for more than £125,000, you’ll pay 1% SDLTon the amount above the £125,000 threshold.

Non-residential and mixed-use properties

Purchase price/lease premium or transfer value Rate of SDLT (percentage of the total purchase price)
Up to £150,000 – annual rent is less than £1,000 Zero
Up to £150,000 – annual rent is £1,000 or more 1%
Over £150,000 to £250,000 1%
Over £250,000 to £500,000 3%
Over £500,000 4%

HM Revenue and Customs (HMRC) has SDLT calculators you can use to work out how much to pay.

For any advice on selling or letting your property please do not hesitate to contact us at Cooper Adams

Click here for our Stamp Duty PDF – stamp duty new 2014

 

Factsheet: Buying a home

IMG_0678Here is our rough guide to buying a home

1. Find out how much you can borrow

Our independent mortgage broker will give you free advice based on your income and savings/deposit to what you can borrow and how much the monthly payments are. Being independent there is a choice of all the lenders and all their products. Make sure you don’t stretch to more than you can comfortably meet in monthly repayments and remember to keep some savings aside to meet stamp duty and other fees, and to furnish your new home. Get information about the different mortgages on offer, and start thinking about whether you want to go for a fixed or variable-rate deal. Our broker will also work out the total costs involved to getting the keys of your new home and all the approximate monthly costs and bills on your new home. Get the broker to print you a ‘Mortgage agreement in principle’ – this is proof based on your information provided and great to show estate agents when you offer that you are ready to go quickly.

2. Define your criteria

Once you know what you can afford to buy decide what you are looking for in a property – house, bungalow or apartment? Whether you need parking and a garden, how many bedrooms you need, pick an area on which to focus your search. Consider what you want out of the location – are local schools, transport links and shops important to you?

3. Beginning the search

Start scanning the internet and local newspapers and register with estate agents. If you see a property you want to look at, call the agent and arrange a viewing. For the earliest properties check the local estate agent’s website before the national portals as they will always be at least one day ahead giving you an advantage on first pickings. Most portals upload new properties the night after they come onto the market. Tell the estate agent the maximum you can pay and the agent will give you properties that may consider an offer around your maximum. Some sellers will take lower offers than others but want to keep their asking price constant.

4. Out and about viewing

Visit lots of properties. You are unlikely to find the home you want straight away, so don’t despair and don’t be tempted into edging over your budget. This is probably going to be your biggest financial outlay, so it is worth waiting until you find the right place. You will soon become a mini expert in your price range and will soon learn what you feel is priced low or high. If you like it get your offer in quickly before someone else does.

5. Making an offer

When you find somewhere you like, make an offer. Don’t forget the agent is working on behalf of their paying client – the seller. If you ever feel the asking price is too high and doesn’t reflect the work involved try a lower offer. Many buyers initially make an offer below the asking price, and often this is accepted. You may want to start low and negotiate with the agent to find a price that satisfies both parties. But if you want to be sure you get the property you like – and you think it is worth the asking price – you may want to offer the full amount straight away, this will also deter others offering the full price. At Cooper Adams as soon as an offer is accepted we stop all marketing and viewings. We cannot stop offers from people that viewed before as this is illegal but always advise the owner to stick to their morals. All agents should always get your financial proof before they speak to the vendor, if mortgage they will want to see you AIP – Agreement in principle from your lender or they will need to verify your financial status via their or your broker. If you are a cash buyer the agent will need to confidentially see proof of this or verification from your bank/accountant or solicitor.

6. Acceptance & Solicitors

If your offer is accepted, ask the estate agent to take the property off the market and find a solicitor. If you need to find a solicitor, ask for a few quotes and follow up personal recommendations. Always choose a solicitor who offers ‘no move no fee’ and also a fixed fee – Cooper Adams can organise this for you. The solicitor will write to you outlining their service and fees and ask you to confirm acceptance. The estate agent will confirm the sale in writing to you, the vendors and both sets of solicitors. Your solicitor will inform you of the buying process. It normally takes around 12 weeks from offering to moving in. In those 12 weeks you will be required to pay for solicitors fees. Your solicitor will ask for all the legal paperwork from the seller’s solicitor and check this is all in order. Any parts in doubt your solicitor will get further information on.

Your solicitor will also carry out standard searches –

The local authority search. This will show all sorts of things, such as whether you are in a conservation area, if the local roads are adopted (if not you could end up having to pay towards them), if there have been any planning applications affecting the property, if the council have plans to develop the area, etc.

An environmental search. It will show whether the land is known or likely to be contaminated, which is important because the owner of a property can be required to pay for the clean up of any contamination.

A drainage and water search. Which shows whether the property is connected to mains water and drainage and other related information.

Other searches are “optional” but some may be very important depending where your property is located.

Flooding. Which should be self-explanatory.

Commons registration search. Which shows whether the land is designated as common land.

Chancel liability search. Which shows whether the land is subject to a liability to pay for the upkeep of the parish church.

Coal/lead/tin/china clay mining searches. Are important if you are in an area with a history of the relevant mining. You need to know if your property might be located over a mine that could collapse and cause subsidence.

7. Getting a mortgage

Once your offer has been accepted, call your broker or a lender to sort out your mortgage application. At this point you will need to provide paperwork showing your income and outgoings. Ask to speak to Cooper Adams’ independent broker.

8. Surveys

Find out if there are any hidden problems by arranging a survey of the property.

Your lender should arrange a valuer to check the property is worth lending on but this is nothing more than that. Its valuation will be very simple and you should arrange your own survey to get an idea of what problems there may be with the property. Cooper Adams work with a local ‘jargon free’ surveyor who will inspect the property for you. If any major defects are found these can normally be dealt with via Cooper Adams and the sellers. If the survey requires further reports to be done again speak to your estate agent to go forward with this.

9. Exchange of contracts

After your solicitor or conveyancer has completed all the necessary checks and your mortgage company has issued the formal mortgage offer, you’ll be asked to sign a contract legally committing you to the purchase. At this point you will need to pay a deposit for the property – usually at least 5% of the price. At this point you will usually agree a date to complete the sale.

10. Book a removal van

Book a removal van early to get a good deal.  When you know your moving date you can start organising how to get your possessions to your new home. This could involve hiring a van and doing it yourself, or hiring professional removal men. Either way, you should act fast to give yourself the best chance of finding a company to help when you need at a good price.

11. Buy buildings insurance

Your lender will expect you to have buildings insurance in place for the date of completion. It will quote a rebuild cost in its valuation – this is the amount you need to cover.

12. Completion

This is when the property finally becomes yours. When your solicitor tells you that the sale is completed you can pick the keys up from the estate agent.

13. Move in

Brace yourself for a house full of boxes.

 

For more in detail advice on any buying, selling or letting matter please contact any of the team at Cooper Adams

The Cooper Adams Monthly Residential Housing Market Report

BN16 Market Review February/March 2012

Property Shortage Strengthens BN16 Asking Prices

  • More new mortgage deals make it easier to buy
  • Cooper Adams has more new buyers registered, more viewings & more sales compared to last year
  • 17% less property on the market locally compared to this time last year

Reviewing February, we can report that the market activity was still very strong. With plenty of interest from buyers and a continued shortfall of fresh, new properties, house prices increased by 1.4%

Compared to this time last year, there is 17% less property available on the market. This is positive in that the lack of properties helps buyers to achieve a quick sale as there is less competition. If you’ve sold and are looking to buy, there’s competition for suitable properties that are available immediately.

At Cooper Adams, we have registered more new buyers than in February last year and have recorded higher viewing gures and achieved more sales than at the same time last year – and the continued good weather has helped.

We’ve also noted a surge in rst time buyers who are now returning to the market to escape the high rental prices. There are now more mortgage deals available for buyers, which are welcomed – although a 10% deposit is still essential.

We’re expecting market activity to improve still further; particularly with British Summertime approaching and lighter evenings and improved weather on the way, particularly on the South Coast. We feel that the improvement in the market will hinge on more property being brought to the market – certainly over the last two months, the signs are that the demand is there.

http://www.cooper-adams.com/monthly-market-report.html

 

Disclaimer: This report is produced for general information only. Whilst every eort has been made to ensure the accuracy of this publication. The content remains the property of Cooper Adams under copyright and reproduction of all or part of it in any form is prohibited without written permission from Cooper Adams. Cooper Adams obtained information via Rightmove.co.uk on national & local pricing and trends. The properties were on sale by estate agents on 1st March 2012 and advertised on Rightmove.co.uk.

How to be a first-time buyer

While the first-time buyer has every reason to feel aggrieved with the perceived difficulties of getting on the property ladder, some rays of light have appeared recently.

It is important not to get sucked in to the “mortgages are not available” syndrome as the reality is very different.

There are more lenders and products available, especially at higher loan-to-values (LTVs) than there were last year, while mortgage rates are still at historically low levels.

Proper preparation

Preparing for a mortgage starts early so make sure your documentation is in order. Lenders like to see:

  • your last three years’ address history, with no gaps
  • your last three months’ payslips and your last P60 form or three years’ accounts
  • your last three months’ bank statements
  • full details of any loans or credit cards you have

Providing this information on day one can speed up the process no end.

All lenders want to make sure they are lending money to someone who is highly likely to pay it back.

So it may be worth checking your credit score with a company like Experian or Equifax.

Simple things like paying all your credit cards on time and making sure you are on the voters’ roll at your current address will help.

Deposit

The popular belief is that unless you have a massive deposit you will struggle to get a mortgage.

The amount you can borrow depends largely on your individual circumstances”

However, according to the financial information service Moneyfacts, there are now 49 mortgages requiring a deposit of at least 5% of the property value, compared with just 24 last year.

Meanwhile the number of 90% mortgages has increased from 214 to 343 in the past year.

These products are often cheaper than they were several years ago, and work out similar to average rental payments – if not less for those in major cities.
How much to borrow?

Many lenders now work on affordability models, which means they will look at all your income, outgoings, age, number of dependants and other factors.
Mortgage form Obtaining a mortgage is much more difficult than it used to be before the onset of the banking crisis

Therefore the amount you can borrow depends largely on your individual circumstances.

In some instances you can borrow a maximum of five times your single or joint income, but if you have a family or large outgoings, this could be considerably less.

The standard amount tends to be about four times your income.

A simple monthly budget planner detailing all your monthly spending now, and what you expect to pay when a property owner, is worth its weight in gold.

Work out what you really are prepared to “sacrifice” in order to own your own home so there are no surprises, and stick to the budget you are comfortable with.

Property

When buying a property to live in, the primary concern is that it is within your budget and will be a suitable home for you.

You should only consider an interest-only loan if you have a viable way of repaying the loan”

The view that buying a property is as much an investment as a home looks outdated.

House prices are unlikely to rise much in the near future, which is actually a good thing as it makes climbing that tricky housing ladder all the more practical.

Lenders’ foremost concern when looking at the security they are lending against is: “Would this be easy to re-sell?”

That means, is there good demand in the area and is the property in a good condition?

It is a good principle for you to apply when looking at buying your first time.

Agreement in principle

To make sure you have the best chance of buying a home, securing a mortgage “agreement in principle” (AIP) first is a good start.

This confirms in writing how much a lender will be prepared to lend you, subject to them checking the information given to them.

This AIP can then be used to confirm to the vendor your creditworthiness, and that you are a serious bidder.

Spending some time researching the different mortgages is time well spent.

Information can be obtained by visiting your bank or online comparison websites, but remember these avenues rarely give you advice unless you specifically ask for it.

A visit to an independent mortgage broker can help make sense of the vast array of choices and help avoid costly mistakes.

Repayment or interest-only?

Perhaps the biggest change in recent weeks is the way that lenders view interest-only mortgages.

For those looking to borrow more than 75% of the value of the property, this is now no longer an option for almost all lenders.

Therefore a repayment mortgage will be the only way to proceed.

You should only consider an interest-only loan if you have a viable way of repaying the loan, such as savings, ISAs, investments or the ability to trade down to a cheaper property in the future.

Sharing the cost

For those who are unable to borrow the amount they need or are struggling with deposits, you may need to turn to the “Bank of Mum and Dad”.

There are schemes available which allow parents to act as guarantors on the loan, or to deposit savings with a lender which act as an “insurance” against higher loan-to-value borrowings.

Alternatively, purchasing with a friend or two may let you pool your resources and initially can work very well.

The issue comes if one of the parties then wishes to move on at a different time to the others.

It is important to take legal advice before you enter into such a transaction.

Shared ownership

There are also schemes and initiatives involving shared ownership.

This involves housing associations allowing you to buy a percentage share of the property, say 50%, while paying rent on the balance.

This brings the deposit required down dramatically.

The remaining share can be bought later, when affordable, in stages known as staircasing.

For those looking at purchasing a newly built property, there is also the government Homebuy scheme.

Under this, if you qualify, there are two options:

Receive an equity loan – you get a loan towards the home’s purchase price that has no fees for five years

Shared ownership – you buy a share of your home and pay rent on the remaining share

You will need to take out a mortgage to pay for your share of the home’s purchase price.

In summary, while lenders are undoubtedly being choosy at present, for the average buyer there is still a lot of choice, especially for the buyer who takes a little advice and time to prepare.

Courtesy of Money Talk by Andrew Montlake Coreco mortgage brokers and http://www.bbc.co.uk/news/business-17193609

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